A new survey carried out by hospitality and tourism industry associations in the UK reveals that if the current reduced rate of VAT of 5 per cent for businesses in the sector, including hotels and restaurants, reverts to the previous 20 per cent at the end of March as planned, some 310,000 jobs will be lost.

The survey of 1,144 businesses, carried out by UKHospitality, the Tourism Alliance and the Association of Leading Visitor Attractions under the banner of the Cut Tourism VAT (CTV) Campaign, looked at how businesses had used the cut in VAT announced by UK Chancellor of the Exchequer Rishi Sunak in July 2020 and extended in September until March. The survey found that the majority of businesses used the savings to retain staff, pay suppliers or passed these on to customers.?
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CTV said that a third of businesses in the sector would not have survived had the Chancellor not extended the reduced rate until the end of March 2021.

The campaign organisers said, ¡°If the VAT rate reverts back to 20 per cent in April 2021, there will be further cut-backs and job losses and the CTV Campaign estimates that this could mean the loss of 310,000 jobs in hospitality and tourism. ?

¡°If the VAT cut were to continue beyond March 2021 most operators would use it to rebuild through investment and price reductions for consumers as well as continue to meet the costs of Covid compliance.¡±

Graham Wason, chairman of the CTV Campaign, said: ¡°The results of this survey show not only that reduced VAT has been crucial to the survival of hundreds of tourism and hospitality businesses, but also that what is vitally needed now is the announcement of a continued reduction to boost investment, jobs and the wider UK economy.¡±